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On February 16, NYDFS issued a cybersecurity fraud alert to regulated entities describing a “widespread cybercrime campaign” designed to steal nonpublic private consumer information (NPI) from public-facing websites and use the stolen NPI to fraudulently apply for pandemic and unemployment benefits. NYDFS states that it has received reports from several regulated entities of “successful or attempted data theft” from websites providing instant rate quotes such as auto insurance rates, noting that even if NPI is redacted, “hackers have shown that they are adept at stealing the full unredacted NPI.” NYDFS advises regulated entities to review security controls for public-facing websites that display or transmit NPI (even redacted NPI), and reminds entities of their obligations under the state’s cybersecurity regulation to promptly report the theft of consumers’ NPI. (See InfoBytes coverage on NYDFS’ cybersecurity regulation here.) The cybersecurity fraud alert furthers NYDFS’ commitment to improving cybersecurity protections for both consumers and the industry, and follows an enforcement action taken last year alleging cybersecurity regulation violations (see InfoBytes coverage of NYDYS’ complaint against a title insurer for allegedly failing to safeguard mortgage documents here), as well as the regulator’s recently issued cybersecurity insurance framework (covered by InfoBytes here).
On July 22, NYDFS filed a statement of charges against a title insurer for allegedly failing to safeguard mortgage documents, including bank account numbers, mortgage and tax records, and other sensitive personal information. This is the first enforcement action alleging violations of NYDFS’ cybersecurity regulation (23 NYCRR Part 500), which took effect in March 2017 and established cybersecurity requirements for banks, insurance companies, and other financial services institutions. (See InfoBytes coverage on NYDFS’ cybersecurity regulation here.) Charges filed against the company allege that a “known vulnerability” in the company’s online-based data storage platform was not fixed, which allowed unauthorized users to access restricted documents from roughly 2014 through 2019 by changing the ImageDocumentID number in the URL. Although an internal penetration test (i.e., an authorized simulated cyberattack) discovered the vulnerability in December 2018, NYDFS claims that the company did not take corrective action until six months later, when a well-known journalist publicized the problems.
The company allegedly violated six provisions of 23 NYCRR Part 500, including failing to (i) conduct risk assessments for sensitive data stored or transmitted within its information systems; (ii) maintain appropriate, risk-based policies governing access controls to sensitive data; (iii) limit user-access privileges to information systems providing access to sensitive data, or periodically reviewing these access privileges; (iv) implement a risk assessment system to sufficiently identify the availability and effectiveness of controls for protecting sensitive data and the company’s information system; (v) provide adequate data security training for employees and affiliated title agents responsible for handling sensitive data; and (vi) encrypt sensitive documents or implement suitable controls to protect sensitive data. Additionally, NYDFS maintains that, among other things, the company misclassified the vulnerability as “low” severity despite the magnitude of the document exposure, failed to investigate the vulnerability within the timeframe dictated by the company’s internal cybersecurity policies, and did not conduct a reasonable investigation into the exposure or follow recommendations made by its internal cybersecurity team.
A hearing is scheduled for October 26 to determine whether violations occurred for the company’s alleged failure to safeguard consumer information.
NYDFS’ cybersecurity FAQs provide process for covered entities that no longer qualify for exemptions
On February 2, NYDFS updated its answers to FAQs regarding 23 NYCRR Part 500, which established cybersecurity requirements for banks, insurance companies, and other financial services institutions. (See here for previous InfoBytes coverage on updates to the FAQs.) Among other things, the update outlines the procedures covered entities must follow if the entity ceases to qualify for exemptions under Section 500.19. Covered entities who no longer qualify for an exemption will have 180 days from the end of their most recent fiscal year to comply with all applicable requirements of 23 NYCRR Part 500. NYDFS further notes that covered entities may be required to periodically refile their exemptions to ensure qualification.
On January 31, NYDFS issued a reminder for regulated entities that the final deadline for implementing NYDFS’s cybersecurity regulation ends March 1. Under the new regulation, banks, insurance companies, mortgage companies, money transmitters, licensed lenders and other financial services institutions regulated by NYDFS are required to implement a cybersecurity program to protect consumer data. The last step in the implementation timeline requires covered entities that use third-party providers to put in place policies and procedures ensuring the security of information systems and nonpublic information accessible to, or held by, such third parties. NYDFS also reminded regulated entities that the deadline to file their second certification of compliance via NYDFS’ cybersecurity portal is February 15.
Previously InfoBytes coverage on NYDFS’ cybersecurity regulation are available here.
On October 25, NYDFS provided a new update to its answers to FAQs relating to 23 NYCRR Part 500, which took effect March 1, 2017, and establishes cybersecurity requirements for banks, insurance companies, and other financial services institutions. The original promulgation of the FAQs was covered in Infobytes, as were the last updates in February, March, and August.
The new update states that when a covered entity uses an independent “Utilization Review” agent (UR agent) who receives nonpublic information, the covered entity should treat the UR agent as a third-party service provider in order to properly assess and address any potential risks to their data and systems. NYDFS emphasizes that covered entities bear the responsibility for these protections.
On August 8, the New York Department of Financial Services (NYDFS) issued a reminder for regulated entities required to comply with the state’s cybersecurity requirements under 23 NYCRR Part 500 that the third transitional period ends September 4. Banks, insurance companies, and other financial services institutions (collectively, “covered entities”) that are required to implement a cybersecurity program to protect consumer data must be in compliance with additional provisions of the cybersecurity regulation by this date. As of September 4, a covered entity must (i) start presenting annual reports to the board by the Chief Information Security Officer on “critical aspects of the cybersecurity program”; (ii) create an “audit trail designed to reconstruct material financial transactions” in case of a breach; (iii) institute policies and procedures to ensure the use of “secure development practices for IT personnel that develop applications”; and (iv) implement encryption to protect nonpublic information it holds or transmits. Covered entities are also required to have policies and procedures in place “to ensure secure disposal of information that is no longer necessary for the business operations, and must have implemented a monitoring system that includes risk based monitoring of all persons who access or use any of the company’s information systems or who access or use the company’s nonpublic information.” Covered entities are further reminded that they have until March 1, 2019, to assess the risks presented by the use of a third-party service provider to ensure the protection of their security systems and data.
In coordination with the reminder, NYDFS provided new updates to its FAQs related to 23 NYCRR Part 500. The original promulgation of the FAQs was covered in InfoBytes, as were the last updates in February and March. The four new updates to the FAQs add the following guidance:
- Clarifies that in certain circumstances, an entity can be a covered entity, an authorized user, and a third party service provider, and therefore must comply fully with all applicable provisions;
- Outlines specific compliance provisions for covered entities that have limited exemptions from the NYDFS cybersecurity requirements;
- Identifies a covered entity’s responsibilities when addressing cybersecurity risks with respect to bank holding companies; and
- Clarifies situations and requirements for when a covered entity can rely upon the cybersecurity program that another covered entity has implemented for a common trust fund.
Find continuing InfoBytes coverage on NYDFS’ cybersecurity regulations here.
On March 23, the New York Department of Financial Services (NYDFS) provided a second update to its answers to FAQs relating to 23 NYCRR Part 500, which took effect March 1, 2017 and establishes cybersecurity requirements for banks, insurance companies, and other financial services institutions. The original promulgation of the FAQs was covered in InfoBytes, as was the last update in February. The new update to the FAQs adds the following guidance:
- An individual filing a Certificate of Compliance for his or her own individual license with no Board of Directors is acting as a Senior Officer as defined by 23 NYCRR 500 and should complete the filing process in that manner; and
- Entity ID is defined as an entity’s state-issued unique license or charter number. Specific information is provided for insurance companies and mortgage loan originators in the FAQs.
On March 5, the New York Department of Financial Services (NYDFS) published FAQs for regulated entities that have not yet filed cybersecurity certifications of compliance (Certification of Compliance) required under 23 NYCRR 500. The deadline to file was February 15 and notices recently were sent to regulated entities. Among other things, the FAQs state that a separate Certification of Compliance must be filed for each license an entity holds, and that entities who have failed to submit a Certification of Compliance must do so “as soon as possible.” Entities that received a reminder to certify their compliance but filed for an exemption under Section 500.19 are still required to file the Certificate of Compliance to “confirm that they are in compliance with those provisions of the regulation that apply.”
Find continuing InfoBytes coverage on NYDFS’s cybersecurity regulation here.
On February 21, the New York Department of Financial Services (NYDFS) updated its answers to FAQs relating to 23 NYCRR Part 500, which was last updated in December 2017. As previously covered in InfoBytes, 23 NYCRR Part 500 took effect March 1, 2017, and establishes cybersecurity requirements for banks, insurance companies, and other financial services institutions. This week’s updates to the FAQs add the following guidance:
- Due to increasing cybersecurity risks facing financial institutions, NYDFS “strongly encourages all financial institutions, including exempt Mortgage Servicers, to adopt cybersecurity protections consistent with the safeguards and protections of 23 NYCRR Part 500”;
- Not-for-profit mortgage brokers are Covered Entities under the cybersecurity regulation;
- Covered Entities, when acquiring or merging with a new company, must conduct a factual analysis of how the cybersecurity regulation applies to the acquisition or merger. In addition, NYDFS emphasized that Covered Entities must have in place serious due diligence processes and ensure cybersecurity is a priority; and
- Health Maintenance Organizations and continuing-care retirement communities are Covered Entities and must comply with the cybersecurity regulation requirements.
As previously covered in InfoBytes, on January 22, NYDFS issued a reminder to all NYDFS-regulated banks, insurance companies, and other financial services institutions that the deadline to file cybersecurity certifications of compliance was February 15.
On January 22, the New York Department of Financial Services (NYDFS) issued a reminder to all NYDFS-regulated banks, insurance companies, and other financial services institutions that the deadline to file cybersecurity certifications of compliance is February 15, 2018. Mandated by NYDFS’ cybersecurity regulation that went into effect March 1, 2017 (see previous InfoBytes coverage here), the certification covers the prior calendar year and must be filed electronically through the DFS cybersecurity portal. NYDFS Superintendent Maria T. Vullo also announced that going forward, cybersecurity will be incorporated into all department examinations, and cybersecurity-related questions will be added to NYDFS’ “first day letters” issued to commence examinations of financial services companies.
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